Let me tell the story in two parts. Part-1 goes like this: a couple of years ago, me, my boss, and a fellow graduate student (who is still single) were having lunch and discussing the general philosophy of life (or that kind of stuff) in between bites. Somehow, the topic veered towards how people buy homes. Here are a few lines from the conversation:
Me: Any advice about choosing a good house?
Dr. P (my boss): Simple, a good house is the one which your wife likes. Believe me, let her choose the house and you will be happy as long as you keep it. If it takes more money to buy the one she likes - spend it and you will never regret it. If you don’t, a few years down the line you are surely going to regret it and probably will keep hearing about it for a long time to come.
Fellow Graduate Student: [starts chuckling] Really? [keeps chuckling]
Dr. P (to the student): It’s not funny - you will realize it when the time comes.
Part-2 - fast forward to yesterday: while coming back from a trip to a local grocery store, we took a detour to admire some nice houses located in a nice area in town (it’s sort of our 15 minute hobby when we have nothing else to do). Here is a part of the conversation that took place during the drive.
Wife: [pointing to a beautiful large house] I don’t like that one.
Me: Why, what’s wrong with that?
Wife: I think that looks scary. All big houses are scary. Plus, I don’t think we will have time to clean a house that big - we barely manage to clean our small apartment. I would be much happier in a small but cozy house - even slightly bigger than our apartment is fine.
Me: Really? [trying to get a confirmation]
Wife: Yeah… see that one over there [pointing to a much smaller house] - we should get something like that.
I have said enough; my astute readers can now put two and two together and see why a lot of my future troubles are solved. 
I am thinking at least a hundred thousand dollars here, to start with. 
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Yeah, keep the lady happy and everybody will be happy ;).
Oh I get it. [added] Don’t forget the land. I live in a very small (under 400 sf) house on a normal sized lot which can’t be split, and the land is worth more than the house, so I can’t afford to buy it.
While homeowners have been buzzing about reclaiming their lost property rights (after the Kelo decision), nobody noticed or cared that the urban poor lost their property rights 80 years ago and are unlikely to ever get them back.
Apparently this software truncates messages at a “less than” symbol; hence the short messages above.
You’re a lucky. Great blog.
Thanks,
Jaime
um, golbguru i think you aren’t reading between the lines. she “says” she likes that smaller house, but i’m telling you she means that hey you better get a bigger house than that small one. doesn’t mean much larger, but larger nonetheless.
tim– no necessarily true… i’m female and sometimes we do mean what we say.
glad you and your wife think alike Glob!
Tim: “but i’m telling you she means that hey you better get a bigger house than that small one.” — dude you sound experienced
I will keep that in mind and make some backup plans accordingly.
Ambellamy: Thanks for the reassurance.
Do not delay acting on your discovery. The price of small houses will rise and the prices for mcmansions will fall as a result of higher maintenance and utility costs, higher taxes, high cost of commuting, etc. A small house on a big (subdividable) lot - a home run for sure.
The wisdom shown by your professor is just too good. I have got to write an article to link to this.
I hope that your wife isn’t one of those where they say one thing but mean the next! (good luck!)
ROFL - I guess I still think like the single graduate student.
Personally, I would have thought she was just talking, until she said - what I know to be true. Cleaning is a huge job and the larger the house, the more time required. If I didn’t have a large family I would live in a 3 bedroom ranch. I want to live, not clean.
If the price of small houses will rise, why aren’t builders making more of them?
Less material means less profit.
A non-divisible lot’s value is more or less fixed, so why put a structure on that offers a profit of 5K (for the sake of round numbers) when you can build something within the realm of desire and make 50K?
Value may indeed rise on a per sf basis, but monetary value will be going nowhere when the amount of work retains a certain tangibility.
Why not build several small houses on that lot? One builder put four small houses on one standard lot in my neighborhood and sold them all in one week as condos starting at $160K. He walked away with a bundle.
Minimum wage - I have heard it’s a standard strategy in the electronic industry - instead of selling few units for a large profit/unit, sell a lot of them at a smaller profit/unit - in both cases the profit stays the same. However, I am not sure how real estate people play this game - although it would help them if they did - but then that’s like targeting a totally different kind of a market.
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